IFRS 18 and IFRS 19 – the updated 2025 IFRS taxonomy introduced into the European Single Electronic Format

The European Securities and Markets Authority (ESMA) has published the new 2025 version of the IFRS taxonomy, applicable from 2026.

New taxonomy is being integrated into the European Single Electronic Format (ESEF). This step is significant for companies preparing financial statements, as well as for software solution developers, regulators, and auditors.

What changes?

Transitional Framework for IFRS 18 and IAS 1

The IFRS XBRL Accounting Taxonomy 2025 has been developed as a transitional taxonomy that includes a single shared dictionary supporting both IFRS 18 and IAS 1 presentation options. The annual update of the taxonomy used for ESEF is intended to ensure that electronic reporting remains aligned with both the IFRS disclosure standards already in force and those available for early application.

IFRS 18: Presentation and Disclosure in Financial Statements

The new taxonomy incorporates the requirements for presentation and disclosure in financial statements as set out in IFRS 18. Importantly, IFRS 18 will fully replace IAS 1 “Presentation of Financial Statements.” The new standard defines how financial statements should look—both visually and in terms of content—in a human-readable format, in order to ensure digital comparability and transparency, structured according to financial information disclosure requirements (more here: https://www.orients.lv/en/blog/IFRS-XBRL-parskati/). We have already written in detail here about the fact that IFRS 18 is the first standard developed together with the digital team.

IFRS 19: Subsidiaries Without Public Accountability

IFRS 19 offers a simplified set of disclosure requirements for subsidiaries, replacing the full IFRS standards with references to other standards and introducing only a few new requirements. Although it has little impact on publicly listed companies, the inclusion of IFRS 19 in the ESEF taxonomy ensures consistency and facilitates the digitalization of reports for unlisted subsidiaries.

Effective date

The new requirements will apply to financial years beginning on or after January 1, 2026.
Earlier voluntary adoption is possible once these standards are officially endorsed in the EU. It is planned that the mandatory application of the standards for annual reports will begin on January 1, 2027. At the European level, the endorsement process for IFRS 18 and IFRS 19 is still ongoing — IFRS 18 is expected to be approved at the beginning of next year, while IFRS 19 is expected to be approved by mid-next year.
Annual reports for periods beginning on or after January 1, 2025, must use the 2024 or 2025 ESEF taxonomy.

Recommendations for companies on how to prepare for the transition

Steps	Actions
1. Status Assessment	Review which financial statement components (balance sheet, income statement, notes, etc.) will change under IFRS 18 and/or IFRS 19. Identify required “tag” updates in the ESEF taxonomy.
2. Technical Platform Check	Ensure that your XBRL tagging tool supports and automatically complies with the new requirements. Test presentation layouts and disclosure elements.
3. Training and internal processes	Train the finance team (accountants, financial management) and legal/regulatory functions on the new requirements. Prepare internal guidelines and checklists.
4. Cooperation with auditors/consultants	Engage early to discuss the new disclosure requirements and ensure that the audit process is aligned with the new requirements.
5. Communication with external stakeholders	Prepare reports for shareholders, investors, creditors, etc., clearly explaining how the new taxonomy requirements affect financial statements and comparability.

Orients team is ready for the upcoming changes to provide our clients with full support as they adapt to the new IFRS and ESEF requirements. If you’d like to learn more or need assistance, write to us at info@orients.lv.